Mirova and Robeco have announced the firms they have picked to develop a global database of emission avoidance factors, which they say will be “a major step forward for many economic players”.
Two firms, I Care by Bearing Point and Quantis, have been selected to build the database, which will initially cover 80 specifically defined low-carbon solutions such as biomass energy and recycled plastic.
Around 9,600 distinct “avoidance factors” will be created during a first phase of work due to end in the fourth quarter of this year.
Avoided emissions are emissions savings that occur from the use of a low-carbon product instead of a higher-carbon alternative. They are seen as key to helping support transition finance, although the complexity of calculating them has been a challenge to their credibility.
According to Mirova and Robeco, creating a standardised and transparent database of avoidance factors “should make it possible to quantify, compare and audit the emissions avoided by companies and projects, and thus encourage the redirection of financial flows towards assets that promote decarbonisation, addressing for example the production of renewable energy, the electrification of transport, low-carbon property, but also recycling or the rare metals needed for the transition”.
Development of the database is kicking off this month. A first version will be made available in the fourth quarter to all stakeholders with a requirement to calculate avoided emissions. This includes companies, consultants, impact measurement software developers, financial institutions and data providers.
Spearheaded by Mirova and Robeco, the avoided emissions initiative also has the backing of Edmond de Rothschild Asset Management, Natixis, Caisse de Dépôts, Man Group, and others. Railpen, PGGM and Smart Pension were among investors to have put their name to the call for expressions of interest for database developers last year.
“This initiative is a major step forward in the history of Mirova, which, in partnership with Robeco and many players in the financial sector, contributes to inventing a new global market standard aimed at increasing the comparability and transparency of avoided emissions estimates,” said Guillaume Abel, deputy chief executive officer of Mirova.
“This innovation will allow investors to better identify and value companies that contribute positively to the decarbonisation of the economy and are therefore well positioned to create value in a world in transition. It will also facilitate the aggregation of the carbon footprint of delegated assets for our institutional clients,” he said.